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February 2018 January Leading Indicators, February UI Claims

February 22, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Leading Index Springs Into 2018

  • The Conference Board’s Leading Economic Index for January increased by 1.0 percent.
  • Initial Claims for Unemployment Insurance fell by 7,000 for the week ending Feb. 17, to hit 222,000.

 

The Conference Board’s Leading Economic Index posted its 20th consecutive month without a decline in January, surging by 1.0 percent. This index is designed to forecast general economic growth over the next six months. Eight out of 10 components of the Leading Index were positive in January. Building permits provided the biggest push. The ISM new orders index, stock prices, credit, interest rate spread, unemployment insurance claims, consumer expectations for business conditions, and manufacturers’ core capital goods orders were also positive for the month. Two other components, manufacturing hours and manufacturers’ orders for consumer goods, were unchanged in January. The Coincident Index, designed to provide a reading on current conditions, was up by 0.1 percent in January. This was the 48th consecutive month without a decline for the Coincident index. Three components were positive in January. They were non-ag payrolls, personal income and manufacturing/trade sales. Industrial production dipped in January. The Lagging Index, designed to show recent conditions, was also up by 0.1 percent in January. It was powered by the CPI for services, consumer credit and prime rate. Negative components were duration of unemployment (up slightly from a low level) and commercial/industrial loan volume. The inventory/sales ratio and manufacturing unit labor costs were unchanged. The Leading, Coincident and Lagging Indexes were all positive in January, indicating favorable overall conditions. 

Weekly labor data looks good through mid-February. Initial claims for unemployment insurance fell by 7,000 for the week ending February 17, to hit 222,000. Continuing claims for the week ending February 10 fell noticeably, by 73,000, to hit 1,875,000, a very low number. 

St. Louis Federal Reserve Bank President James Bullard, reaffirmed his “dovish” view this morning that too many fed funds rate hikes this year could be overly restrictive for the U.S. economy. Bullard is not a voting member of the FOMC this year. He has been a critic of rate hikes over the last year. 

Market Reaction: Equity markets opened with gains. The 10-Year Treasury bond yield eased to 2.91 percent. NYMEX crude oil is up to $62.74/barrel. Natural gas futures are down to $2.67/mmbtu. 

For a PDF version of this report click here: Leading_Indicators_02222018

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